More Stories

Informist, Friday, Apr. 25, 2025

By Ashna Mariam George 

MUMBAI – Fears of an escalation in India-Pakistan tensions led to a rise in yields on corporate bonds in the secondary market on Friday, dealers said. Yields rose 4-6 basis points across tenures as selling pressure shot up on concern over a potential escalation in tensions between the two countries, dealers said.

Markets reacted on Friday to reports that the Pakistan Army had opened fire along the Line of Control late Thursday, following India's suspension of the 1960 Indus Waters Treaty and a ban on the entry of Pakistani nationals. India's actions came in response to Tuesday's terror attack on tourists at Pahalgam in Jammu and Kashmir, which claimed 26 lives. In retaliation, Pakistan suspended the 1972 Simla Agreement, which had established the Line of Control as the mutually recognised border between two countries.

"Compared to yesterday (Thursday), market was 4-5 bps given (yields up) because of tensions going on India-Pakistan relations, FIIs (foreign institutional investors) have been selling at least in G-secs (government securities)," a fixed income fund manager at a large-sized mutual fund house said. "If things escalate over the weekend, you can see pressure on yields...once things settle down, levels should reverse."

Market participants said the yield movement on Monday will depend on updates over the weekend. If a war like situation does not emerge over the weekend and also if the Reserve Bank of India doesn't announce open market operations, market will be flattish, a dealer at a mid-sized brokerage firm said.

Dealers said the situation has created panic among market participants who sold papers on Friday. "There was lot of selling pressure in equity and bonds because of the crossfire incident which made everyone panic," a dealer at another mid-sized brokerage firm said. "Mutual funds took advantage (bought papers) because they had cash," he added.

While mutual funds were on the buying side, banks and primary dealers were on the selling side. Dealers said foreign portfolio investors also likely sold papers. Deals aggregating INR 163.55 billion were traded on the National Stock Exchange and BSE combined, higher than INR 120.34 billion on Thursday. Most traded bonds on Friday were those issued by the Housing And Urban Development Corp., the Power Finance Corp., the National Bank for Agriculture and Rural Development, the Small Industries Development Bank of India, and Sundaram Finance. 

The primary market did not see any major issuances on Friday. Two public sector entities are in line to tap the market on Monday. REC Ltd. has invited bids to raise up to INR 60 billion through five-year bonds maturing on May 31, 2030, and 10-year bonds maturing on May 31, 2035. Market participants expect the five-year bond to sail through at a coupon of 6.80-6.85% and the 10-year bonds to get subscribed at 6.98-7.00%.

Hindustan Petroleum Corp. Ltd. will also tap the market on Monday to raise up to INR 25 billion through five-year bonds. The issue is expected to sell at a coupon of 6.83-6.85%. However, dealers expect the cut-offs to go up if tensions between India and Pakistan escalate over the weekend.

UDAY BONDS

None of the Ujjwal DISCOM Assurance Yojana bonds were traded in the secondary market on Friday, according to the Reserve Bank of India's Negotiated Dealing System–Order Matching System.

BENCHMARK LEVELS FOR CORPORATE BONDS:

End

Edited by Subhojit Sarkar 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.

Informist Media Tel +91 (22) 6985-4000

Send comments to feedback@informistmedia.com

© Informist Media Pvt. Ltd. 2025. All rights reserved.